Six Republican-led states are suing the Biden administration in an attempt to halt its plan to forgive student loan debt for tens of millions of Americans, accusing it of overstepping its executive powers.
It is at least the second legal challenge this week to the sweeping proposal President Biden laid out in late August, when hefor a large number of borrowers. The announcement, after months of internal deliberation and pressure from liberal activists, became immediate political fodder ahead of the November midterms, while fueling arguments from conservatives about legality.
In the lawsuit filed Thursday in federal court in Missouri, the Republican states argue that Biden’s cancellation plan is “not remotely tailored to address the effects of the pandemic on federal student loan borrowers,” as required by the 2003 federal law that the administration uses as a legal justification. They point out that in an interview with CBS’s “60 Minutes” this month, Biden declared the Covid-19 pandemic over, yet uses the ongoing health emergency to justify massive debt relief.
“It is patently unfair to saddle hard-working Americans with the loan debt of those who chose to go to college,” Arkansas Attorney General Leslie Rutledge, who heads the group, said in an interview.
She added, “The Department of Education is required by law to collect the outstanding balance on the loan. And President Biden does not have the authority to override that.”
The states of Iowa, Kansas, Missouri, Nebraska and South Carolina joined Arkansas in the suit. Iowa has a Democratic attorney general, but the state’s Republican governor, Kim Reynolds, signed on the state’s behalf. The states claim Missouri’s loan servicer faces a “number of ongoing financial damages” because of Biden’s decision to cancel loans. Other states that joined the lawsuit argue that Biden’s pardon plan will ultimately disrupt state coffers.
Biden’s forgiveness program would cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, will have an additional $10,000 in debt forgiven.
The administration also said it would extend the current pause on federal student loan repayments — put on hold near the beginning of the pandemic more than two years ago — once more through the end of the year.
The administration faced threats of legal challenges to his plans almost immediately, with conservative lawyers, Republican lawmakers and business-oriented groups arguing that Biden overstepped his authority by taking such sweeping action without congressional consent.
Democratic lawmakers fighting tight re-election contests also distanced themselves from the student loan plan, as Republican officials called it an unfair government giveaway to relatively wealthy people at the expense of those who did not pursue higher education.
In their lawsuit, the Republican attorneys general also argue that the pardon program violates the Administrative Procedure Act, which sets out how federal agencies must make rules to ensure that executive branch policies are well reasoned and explained.
“The president does not have the authority to put himself in the place of Congress,” Rutledge said in the interview. “These actions must be taken by Congress, and he cannot override that.”
To justify the legality of the plan, the Biden administration is relying on a post-Sept. 11, 2001, the law intended to help members of the military, which the Justice Department says allows Biden to reduce or erase student loan debt during a national emergency. But Republicans argue that the administration is misinterpreting the law, in part because the pandemic no longer qualifies as a national emergency.
Another lawsuit against Biden’s student loan program was filed this week in federal court in Indiana by the Pacific Legal Foundation, a libertarian legal advocacy group that employs a lawyer who says he would be harmed by the forgiveness plan. The attorney, Frank Garrison, says wiping out his current debt load would trigger a tax liability from the state of Indiana, which is among at least a half-dozen states where the forgiven loan amounts will be subject to state taxes.
The White House dismissed the lawsuit as groundless because any borrower who doesn’t want debt relief can opt out. The Department of Education is still on track to unveil the application for the forgiveness plan in early October.
Republicans have also seized on the Biden plan’s price tag and its impact on the nation’s budget deficit. The Congressional Budget Office said this week that the program will cost about $400 billion over the next three decades. The White House responded that the CBO’s estimate of how much the plan will cost in its first year, $21 billion, is lower than what the administration originally thought.